How to avoid ABSD? (Additional Buyers’ Stamp Duty)

How to avoid ABSD? (Additional Buyers’ Stamp Duty)

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Additional Buyers’ Stamp Duty, commonly known as ABSD, is a temporary cooling measure implemented to cool the property market from buying frenzy. ABSD is only applicable to the number of residential property you own. In another words, regardless of how many commercial properties you own, your second residential property purchase as a Singaporean will be subjected to 7% of ABSD. The Buyers’ Stamp Duty (BSD) payable for all property purchase is calculated in the manner below:

(1% of 1st $180,000)+(2% of 2nd $180,000)+(3% of portion in excess of $360,000)

The shorten formula will be (3% x Purchase Price) – $5400. This formula will only be applicable if the transaction is beyond $360,000. Similar to BSD, ABSD is calculated based on purchase price. 12 January 2013 is the latest revision of ABSD and the rates are as below:

SINGAPOREAN 0% 7%  10%
SINGAPORE PR  5%  10% 10%
FOREIGNER  15% 15% 15%



The reasons that people from these countries are treated as equivalent to Singaporean is due to existing Free Trade Agreements. They are citizens and permanent residents (PR) of Liechtenstein, Norway, Switzerland, and Iceland. For United States, only the citizens may apply for such ABSD remission.


Personally, this is a clause which I feel is most hindering to upgraders and unbalanced between private and public housing, probably because of the difficulty in enforcement. A HDB owner buying a new HDB under Build-To-Order scheme does not pay ABSD because he is obligated to sell the existing flat within 6 months from the arrival of the new flat. However this is not the case for private property. If you buy a second private property that is under construction, you will still need to pay for ABSD within 2 weeks upon signing the Sales & Purchase Agreement. However, you may apply for ABSD refund when you have sold your first property. This is provide both the new and the existing property is your matrimonial home which you actually lives in.


To avoid ABSD, couples resort to means like decoupling or buying under childrens’ name. However, the important thing to note is the existence of Total Debt Servicing Ratio (TDSR). Reducing to a single person’s name would mean that the person’s income has to be capable of supporting the loan. This is by far the only way to circumvent ABSD. Another way of using trustee would be even more costly because it requires the property to be fully paid.


Many buyers that I’ve came across are saying that ABSD should be removed soon because of sales volume dropping drastically. So what are the signs should ABSD be lifted? We can take a sneak peak back to history… Measures are lifted amidst recessions and crisis. In short, ABSD will be lifted when you won’t buy even when it is lifted. Look at 1973 when the inflow of foreign funds has cause a steep spike in property market and then comes the regulations that foreigners are not allowed to buy residential properties. When things cool off and the rules are relaxed a little for foreigners to purchase again, there isn’t much rise. Again, in 1986, recommendations are made to help property market because of economic recession of 1984 and 1985, times when people are resistant to buying. So when do you think ABSD will be lifted? My answer would be, when you no longer dare to buy, or when you no longer can afford to buy, especially due to bank not as willing to give out loans.

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